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AirAsia X Berhad • Annual Report 2014
NOTES TO THE FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2014
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(x)
Trade and other payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as
current liabilities if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
(y)
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-
maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer that makes
strategic decisions.
3
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates and judgments are continually evaluated by the Directors and are based on historical experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
The Group and Company make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results.
To enhance the information content of the estimates, certain key variables that are anticipated to have a material impact to the Group’s and Company’s results and financial
position are tested for sensitivity to changes in the underlying parameters.
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
outlined below:
(i)
Estimated useful lives and residual values of aircraft frames and engines
The Group reviews annually the estimated useful lives and residual values of aircraft frames and engines based on factors such as business plan and strategies,
expected level of usage, future technological developments and market prices.
Future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned above. A reduction of 5%
in the residual values of aircraft airframes and engines as disclosed in Note 2(e), would increase the recorded depreciation for the financial year ended 31 December
2014 by RM3,346,000 (2013: RM3,794,000) and decrease the carrying amount of property, plant and equipment as at 31 December 2014 by RM8,548,000 (2013:
RM6,604,000).
(ii)
Deferred tax assets
Deferred tax assets are mainly originating from unutilised tax incentives, unabsorbed capital allowances and tax losses carry forward which have no expiry dates. The
deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised.
Estimating the future taxable profits involves significant assumptions, especially in respect of regulatory approvals for prospective routes, aircraft delivery, fares,
load factors, fuel price, maintenance cost and currency movements. These assumptions have been built based on past performance and adjusted for non-recurring
circumstances and a reasonable growth rate. Based on these projections, management believes that the current non-time restricted temporary differences will be
utilised and has recognised the deferred tax assets as at end of the reporting date.
